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Speculation Unleashed

By Floyd Norris February 22, 2007 10:18 amFebruary 22, 2007 10:18 am

Tales of Florida real estate speculation gone wild used to feature stories of underwater lots and swindled northeners. But now, according to an article in Thursday’s Times by Christine Haughney and Vikas Bajaj, we have investors who knowingly signed up to finance homes they would then flip. They are stuck partially built houses, construction liens and little market for the homes.

In some areas, there was clearly too much capital, and too many people who thought real estate was a sure thing. “See-through” condos and unfinished houses may be lasting reminders of a real estate cycle like no other.

Pity the rich old folks stuck with homes in MIA and WPB – now uninsurable or at unreasonable rates with prices depressed some 40% – with things sure to get worse with global warming bringing waves to their door steps – the Bushies let this happen to the very folks that elected them way back in 2000 – a lesson in how to pick your friends!

I’m not over-whelmed by sympathy – their defence – that they didn’t understand the contracts they signed, though apparently did understand the $40k in quick money they expected from flipping these spec houses, strikes me as the ‘stupid but greedy’ defence and I can’t quite see how that’s gonna fly in court.

I’d have had giant alarm bells going off about a spec builder who couldn’t secure bank, or any other conventional, construction financing in the first place. It all carries the stench of a pyramid scheme right on the face of it.

The depository bank involved has earned the scruntiny of the examiners and that can’t be good news.

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